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The Number of UK Taxpayers Living Abroad Increases by 48%

Published by Prerana
Posted Date: June 12, 2024 , Modified Date: June 12, 2024

The data HMRC has received from foreign tax authorities about UK taxpayers living abroad and potentially not paying taxes has skyrocketed by up to 48% for the past five years. The surge of data also comes from international cooperation and awareness about good reporting standards. So, now more than ever you may not be able to deceive HMRC of any unpaid taxes.

What is the Current Situation of Disclosures?

Even if you do not live in the UK, you probably might have to pay taxes if you earn income from a company or investment established in the UK. Your income may include pension, rental income, savings interest, wages, and more. There were 6.4 million disclosures of foreign tax authorities contacting HMRC about UK taxpayers in 2019. The figure increased every year which is 7.4 million in 2020, 9.2 million in 2021, and 9.5 million in 2022.

UK Taxpayers Living Abroad

The data about UK taxpayers living abroad is provided by foreign tax authorities from over a hundred countries via the Common Reporting Standard (CRS). The CRS is a global standard for the automatic exchange of financial account information between tax authorities. It was created by the Organisation for Economic Cooperation and Development (OECD).

At present 121 countries are the members of CRS, including former tax havens like Switzerland, Bermuda, the British Virgin Islands, the Cayman Islands, and more. The main goal of the CRS is to help tax authorities around the world to identify taxpayers who might be hiding assets or income abroad to avoid paying taxes.

What Does this Mean for UK Taxpayers?

Due to information sharing between different tax authorities, HMRC is better equipped than ever to identify anyone trying to avoid paying taxes. A law firm claims that anyone who have undeclared assets or income should pay attention as the sophistication levels of CRS raises, HMRC will find out.

There are options to disclose any undeclared offshore funds voluntarily. HMRC provides Digital Disclosure Service (DDS) and the Contractual Disclosure Facility (CDF). If you voluntarily disclose these assets, HMRC can potentially decrease penalties. Otherwise, HMRC can charge up to 200% of penalty charges if they uncover the assets independently.

Conclusion

The increase of data about UK taxpayers living abroad highlights the increasing global cooperation among tax authorities. The Common Reporting Standard (CRS) helps to communicate this information among various tax authorities. Due to increasing awareness, there is nowhere to hide with undeclared offshore funds.

So, it is advised to anyone with undeclared foreign assets to voluntarily come forward. HMRC even provides platforms to declare those assets.

Prerana
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